Yonghui Superstores Co.,Ltd. is caught in a cycle of declining revenue and widening losses due to its dual strategy of large-scale store revamps and closures, as the retail giant seeks a path to transformation.
On October 30, Yonghui Superstores released its Q3 2025 financial report, showing quarterly revenue of 12.486 billion yuan, down 25.55% year-on-year, with a net loss of 469 million yuan. By the end of Q3, the company had completed the revamp of 222 stores under the "Pang Donglai model" to achieve economies of scale. Faced with intensifying retail competition and shifting consumer habits, Yonghui has adopted a dual approach—revamping stores while closing underperforming ones—but these measures have yet to reverse its declining performance.
**01. Store Revamps and Closures Weigh on Short-Term Performance** In recent years, Yonghui has aggressively pursued store transformations based on the Pang Donglai model, aiming to upgrade product offerings and shopping experiences for a premium retail shift.
Simultaneously, the company has shut down persistently unprofitable stores to stem losses.
This two-pronged strategy has brought significant short-term pain. Store revamps involve closures for renovations, new equipment investments, asset write-offs, and reopening costs—all of which drive up expenses while reducing revenue.
Meanwhile, closing loss-making stores incurs additional costs, including lease terminations, staff severance, inventory clearance, and asset write-downs, further dragging down overall performance.
Management attributed the revenue decline to fierce retail competition, evolving consumer preferences, and higher demands for shopping experiences and product quality. Another factor is the company’s proactive optimization, which involves revamping promising stores while shutting down underperformers.
**02. Underlying Risks Emerge as Transformation Remains Uncertain** Beyond immediate financial pressures, Yonghui faces deeper challenges in its overhaul. Its debt-to-asset ratio remains well above the industry average, raising concerns about repayment capacity.
Despite high leverage, the company plans to raise funds through private placements to continue store revamps.
However, doubts persist over whether the Pang Donglai model—known for its cautious expansion and service quality—can scale nationally across Yonghui’s vast store network. Market validation is still pending.
Additionally, Yonghui lags in e-commerce development compared to peers, with its online business yet to turn a profit despite experimenting with new models.
Corporate governance is another concern, as limited disclosures on revamp specifics and benefits have fueled market skepticism about progress.
CEO Wang Shoucheng acknowledged the company is in "deep-water reform," emphasizing a long-term focus and a two-to-three-year timeline to stabilize operations.
As traditional retailers pivot en masse, Yonghui’s struggle serves as a litmus test for the industry’s evolution.
*Note: This article incorporates AI-assisted analysis.*
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